This prospective study compared elderly depressives with and without baseline olfactory identification dysfunction to evaluate cognitive change at 6 months and possible relationships between cortisol and homocysteine plasma profiles. Olfactory disfunction may be a nonspecific early finding in Alzheimer's Disease. Many late-onset depressives progress over time to irreversible dementias, but previous research has not identified specific markers for such decline. Method: Subjects were 30 community dwelling elderly (mean age 77 + 6 years; 77%F/23%M) recruited by newspaper advertisement with and without depression and cognitive difficulties. At baseline and 6 month follow- up, subjects completed the Geriatric Depression Scale (GDS), the Alzheimer's Disease Assessment Scale (ADAS), the Folstein Mini-Mental State Examination (MMSE), the Cain Olfactory Identification Test, baseline 8 am plasma cortisol levels (CORT), a 0.5mg dexamethasone suppression test (DST), and plasma homocysteine (HC). 29/30 completed all cognitive measures at follow-up, and 27/30 completed both cognitive and blood measures. Results: Subjects were divided into 4 groups based on baseline scores on the GDS (greater than 15 vs equal to or greater than 15) and Cain Test (equal to or greater than 8 vs less than 8): depressed with and without impaired olfaction (DEP/IMP OLF; DEP ONLY) and nondepressed with and without impaired olfaction (IMP OLF ONLY; NORMALS). Groups were compared with analysis of covariance, controlling for age. There were significant main effects for depression group (p=0.03) on baseline MMSE and ADAS (p<0.0001) as well as a main effect for olfaction group on baseline ADAS (p=0.04) DEP/IMP OLF were the most cognitively impaired at baseline on both measures (MMSE: p=0.04; ADAS: p=0.09). On follow-up, the DEP/IMP OLF demonstrated a trend in cognitive loss (ADAS difference scores: p=0.056). The groups with impaired olfaction had higher baseline CORT (18.9 vs 17.1; p=0.05) and a trend in HC (12.9 vs 8.6; p=0.06). Conclusion: Depressed elderly with olfactory deficits show the greatest baseline cognitive dysfunction and the largest 6 month loss of cognition. Poor olfaction is associated with relative elevations in both CORT and HC, perhaps consistent with neurotoxic damage to olfactory pathways.